CEVA Downgraded By Oppenheimer On Near-Term Pressure, Valuation

Oppenheimer downgraded CEVA, Inc. CEVA after shares approached the firm's price target, with an analyst saying shares of the semiconductor company is fully valued.

The Analyst

Analyst Andrew Uerkwitz downgraded Ceva from Outperform to Perform and removed the firm's price target.

The Thesis

The “long-term thesis” of Ceva remains “intact and highly compelling," Uerkwitz said in a note. (See the analyst's track record here.) 

Ceva will continue to be strong in the long run due to expected growth in advanced processing, CV, and 5G base stations, the analyst said. 

But Uerkwitz expressed uncertainty about near-term growth prospects. While the company has experienced rapid growth over the past three years as a result of consumers transitioning from 2G and 3G to 4G, the analyst said 4G growth opportunities are increasingly limited, and this trend is unlikely to continue at such a rate. Future handset-baseband growth will taper off and will more closely resemble market growth, Uerkwitz said, adding that the transition to a non-handset-baseband company is still in the early stages.

Recent changes in accounting standards could temper with Ceva's ability to provide quarterly guidance and increase visibility, the analyst said. 

“We reiterate the compelling long-term story, but worry that near-term smartphone pressure with accounting changes could prove too much for market Outperformance." 

Price Action

Ceva shares were down 8.63 percent at the close Wednesday at $44.18. 

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